Stocks, bonds and the U.S. dollar fell Wednesday amid reports that China may be slowing down or halting purchases of U.S. sovereign bonds.
[ibd-display-video id=3052401 width=50 float=left autostart=true] Bloomberg News said China, the biggest buyer, sees U.S. debt as less attractive vs. other assets. The report sent bond prices, boosting the 10-year Treasury yield to 2.58% before settling at 2.55%.
PowerShares QQQ Trust ( QQQ ) lost 0.3%, SPDR S&P 500 ( SPY ) slid 0.2% and SPDR Dow Jones Industrial Average ( DIA ) gave up 0.1%. Emerging markets lagged with iShares MSCI Emerging Markets ( EEM ) down 0.7%.
Among bond funds, iShares 20+ Year Treasury Bond ( TLT ) fell 1% intraday, sliding further below its 200-day moving average. It tumbled 1.3% Tuesday to breach the support line. IShares 3-7 Year Treasury Bond (IEI) also extended its losses from the prior session. But TLT recovered most of its Wednesday loss and IEI reversed slightly higher.
Homebuilders, semiconductors and real estate led the downside among sector funds in the stock market today . But banks, metals miners and retail advanced. Gold ETFs rose along with gold futures, which rose 0.4% to $1,318.90 an ounce.
Bitcoin climbed 0.3% to $14,5478.68, according to CoinDesk , down slightly from an earlier high of $14,650.38. Bitcoin Investment Trust (GBTC) slumped 9% to about 1,972, for a third straight decline. It skyrocketed last year but has had a far tamer start this year with a 2% gain.
Meantime, the cryptocurrency it aims to track continues to make daily headlines. So far this year, South Korea has announced a probe into banks to curb speculation, JPMorgan CEO Jamie Dimon said he regrets comments last year in which he called Bitcoin a fraud, and billionaire investor Warren Buffett told CNBC Wednesday he has no interest in cryptocurrencies. The Berkshire Hathaway (BRKA) CEO said: “What’s going on definitely will come to a bad ending .”
Talk about a fresh start for the new year. A cannabis-focused exchange traded fund is soaring as more states legalize marijuana sales.
But it’s not a newly minted ETF. ETFMG Alternative Harvest (MJX) has run up 16.4% so far this year through Jan. 9, according to Morningstar Direct, far ahead of the S&P 500’s 2.8% gain. The fund hit a new intraday high Tuesday. It perked up with a 3% jump Dec. 26, when MJX began trading with a new objective and ticker, and has soared 30% since then.
Before that date, MJX traded under the ticker LARE and was the Tierra XP Latin America Real Estate ETF. In late October, ETFMG notified investors it would change the Latin America index to Prime Alternative Harvest Index and track marijuana stocks instead.
MJX now boasts $317.6 million in assets and owns Canadian pot stocks such as Cronos Group, Canopy Growth and Aurora Cannabis. It also has positions in medical companies such as GW Pharmaceuticals (GWPH), a U.K.-based developer of marijuana-derived drugs to treat cancer and other diseases, and Insys Therapeutics (INSY), whose products target cancer pain.
A handful of tobacco makers including British American Tobacco, Japan Tobacco and Altria Group (MO) round out the 30 holdings in the portfolio.
Since the fund began trading under the new objective and ticker two weeks ago, there isn’t really a track record. It’s currently extended from any buy point . MJX carries a 0.75% expense ratio.
IBD’S TAKE: Even as investors in the cannabis industry try to get in on the ground floor, investing in the space in the U.S. can be tricky.
AdvisorShares Vice ETF (ACT) isn’t a pure-play marijuana fund. As the name implies, it’s a broader theme. As of Dec. 13, cannabis stocks accounted for 20% of its portfolio, while alcohol and tobacco made up the remaining 49% and 32%, respectively.
ACT has attracted $15.1 million since its Dec. 12 launch. Its top holdings include alcoholic beverage producer Constellation Brands (STZ), drugmaker AbbVie (ABBV) and agricultural chemical firm Scotts Miracle-Gro (SMG).
Constellation Brands rose more than 2% Tuesday on news related to its work with Canopy Growth Corp., a Canadian medical marijuana company, to develop nonalcoholic cannabis drinks . The beer and wine giant in October announced it would take a 9.9% stake in Canopy.
ACT is flat this year and bears a 0.75% expense ratio.
Tuesday’s picks, iShares PHLX Semiconductor (SOXX) and SPDR S&P Semiconductor (XSD), remain just below their respective buy points.
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